Connecting With Consumers Through Wearable Devices

NEW YORK, United States — “We see this as a world where every product we create is a smart product,” Stefan Olander, Nike’s vice president of digital sport, told BoF following a SXSW presentation centered on Nike+ FuelBand, a sleek motion-tracking wristband and iPhone app that measures and visualises everyday physical activity, providing users with realtime data on each step taken and each calorie burned.

“RFID tags are so tiny now that they fit in a label,” Olander continued. “There are ways of embedding technology in fibre. You can embed all kinds of sensors in apparel. We’re looking into galvanic skin response, where you can measure sweat and derive a bunch of information that’s really relevant to performance. We’re looking at heart rate, pressure sensors, solar power.” Alongside the popular FuelBand, Nike has already embedded sensors that track and display performance into a number of products, from sportwatches to running and basketball shoes. “There is no reason why every product we make isn’t smart,” said Olander.

Once confined to university labs, clothing and accessories with embedded digital technology — known as wearable devices, or “wearables,” for short — have taken off over the last year, especially in the domains of health, fitness and communications. But according to a recent report by Forrester Research, a wider array of wearables are now set to become as mainstream as devices like the Apple iPad and Kinect for Xbox 360. “In 2012, we’ll see wearables begin to break out of communication, health and fitness to other verticals such as navigation, social networking, gaming and commerce,” predicts the report.

According to Olander, the business opportunity in wearables goes beyond simply offering new and enhanced products. It’s also about offering smart digital services that fundamentally evolve the relationship between brand and consumer. “When you buy a product, traditionally, this is the end of the relationship,” he said. “Our strategy now is: begin the relationship with the purchase of a product. If we can give you the ability to tap into a platform that offers services that mean something to you, now you are going to come back automatically because there’s value. And that creates a much more interesting cycle for both the consumer and the brand because we now have the opportunity to connect on a regular basis.”

In fashion, wearable computing has mostly taken the form of flashy one-off pieces, covered in blinking lights and aimed at entertainers, like the leather and LED jackets designed by London-based Cute Circuit for U2’s current tour. For Autumn/Winter 2012, designer Richard Nicoll took a more practical approach, partnering with Vodafone to develop a tote bag that can recharge a mobile phone and features a Bluetooth-enabled charm that alerts users to incoming calls or texts and displays remaining battery life. But major fashion brands have yet to take wearable devices seriously.

In other industries, by contrast, the evolution of wearables has already given rise to a number of promising products. Vancouver-based, venture-backed Recon Instruments, a leader in micro-optics displays (MOD) and “direct-to-eye communications” has developed special components for ski and snowboard goggles that measure speed, temperature, altitude, vertical decent, airtime, distance jumped, time and location, providing real-time stats and navigation services via a virtual dashboard that appears just below a user’s eyeline. When paired with a smartphone, the goggles can also display incoming calls and text messages. Critically, Recon Instruments is also planning the release of a software development kit (SDK) for programmers, allowing them to build all kinds of new applications and experiences on top of the company’s technology. Nike also has plans to open up the Nike+ platform to applications developers in the near future, Olander told BoF.

Indeed, the real opportunity for wearables is that entrepreneurs will soon start to build thousands of apps and services for these kinds of devices, just as they have done for smartphones and tablet computers. WIMM Labs, a Foxconn-funded Silicon Valley start-up, has developed a wearable computing platform called WIMM, a waterproof, Wi-Fi and Bluetooth-enabled touchscreen watch, with an accelerometer and magnetometer, that already runs a variety of “micro apps” that people can use to do things like monitor their health, plays games and pay for Starbucks coffee.

But according to Forrester, “to break out from their current niche to anything approaching mainstream, wearables need the backing of one or more of the big five platforms: Apple, Google, Microsoft, Amazon, and Facebook” and their respective developer communities. Each platform has its advantage. “Apple has the most polished marketing, channel and brand. Google has an open platform and license to dabble. Microsoft has the best depth sensor yet. Amazon has information on more than 100 million products and their buyers. Facebook has a Rolodex — and facial recognition — for 800 million people,” says the report.

Last April, researchers at the University of Exeter, in the UK, announced a major breakthrough: the invention of a highly flexible, lightweight material that conducts electricity. Called GraphExeter, the new synthetic material “could revolutionise the creation of wearable electronic devices, such as clothing containing computers, phones and MP3 players,” according to a post on the university’s website.

But even for the most forward-thinking fashion brands, exploiting this kind of opportunity presents significant challenges. First, fashion and apparel companies need to cultivate platform partnerships with major technology players. But secondly, “you have to have new competencies,” Michael Liebhold, a senior researcher at the Institute for the Future in Palo Alto, told BoF. This means cultivating in-house developer expertise. “It’s really a new kind of product line. This is a two to three year R&D,” said Liebhold.

Meanwhile, researchers at Google’s secretive Google X laboratory are thought to be working on several wearable devices. Indeed, the company’s augmented-reality glasses, which have any number of potential applications for communication and navigation, are expected to go on sale by the end of the year at “around the price of current smartphones.” Apple, which has been encouraging consumers to wear its iPod Nanos on their wrists, is thought to be prototyping wearable devices, as well.

So will increasingly tech-savvy consumers, who have rapidly taken to products like the Apple iPad, soon expect fashion companies to integrate smart technologies into their products or start shopping somewhere else? Will the apparel of the future be made by technology companies? “No. Evolutionary, not disruptive,” said Liebhold on the rise of wearable devices. “For now, this is all incremental.”

But it’s not too early for technology-forward fashion brands to start thinking about wearables. The first question to ask is “what is the physiological or psychological need?” said Liebhold. “How can these technologies make the wearer look cooler? How can they make fashion more fashionable?”